Unemployment insurance key to secure private sector jobs

Economists and business experts believe that the unemployment insurance system was a crucial move to guarantee an emergency source of income for private sector’s employees in the event they suddenly find themselves temporarily or permanently out of a job.
The experts agree that the system will fill the regulatory gap in this regard, and noted that the official cap that was put on minimum wages for Saudis and the social security subscriptions to avoid workplace discrimination was applicable only on Saudis.
The Shoura Council recently approved the unemployment insurance system, which includes 20 articles. The insurance system is designed to partially replace lost wages when a worker or employee is out of work for reasons beyond his control. It applies to all Saudis registered under the social security program of the state, without discrimination.
Economist Fadel bin Saad Al-Boeinein told local media that the system would solve problems that may emerge during the implementation of the new labor law, which allows the employer to dismiss an employee for operational or structural reasons.
“In some countries of the world, the government allocates unemployment benefits for the unemployed until he or she finds a job,” he said, adding: “In any case, applying the system through the social security program is a good move.”
He was also confident that the system would also provide the General Organization for Social Insurance (GOSI) a good source of revenue; estimated to be around 2 percent of the wages of subscribers.
Naif Al-Eid, another economist and researcher, said the system was necessary, especially given its success in many Arab countries. “Implementing the system in the Kingdom will reduce unemployment rates, and raise rates of employment in the private sector,” he said, pointing out that the latest statistics showed the workforce strength in the country stood at 11,286,744 in 2013.
Al-Eid, however, cautioned that the Saudi labor market faced big challenges including the large number of law cases that negatively affect the market. “This obviously indicates the importance of supporting labor market with further reforms that should make the private sector a safe environment to attract more Saudis,” he said.
Hadi Al-Faleh, head of human resources at a private sector firm in Riyadh, said the system has positive implications on job security for Saudi employees. “It will greatly contribute to the Saudization process of jobs in the country,” he asserted.